Procore Technologies, Inc.

Good afternoon. Thank you for attending the Procore Technologies 2023 Q2 earnings call. My name is Matt and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call for an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I will now have to pass the conference over to our host, Matthew Police, VP of Finance.

All right, thanks. Good afternoon, everyone. Welcome to Procore's 2023 second quarter earnings call. I'm Matthew Pulleys, VP of Finance. With me today are Thuy Cordmanche, founder, president, CEO, and Howard Fu, CFO. Further disclosure of our results can be found in our press release issued today, which is available on the investor relations section of our website and our periodic reports filed with the SEC. Today's call is being recorded and a replay will be available following the conclusion of the call. Comments made on this call may include forward-looking statements regarding our financial results, products, customer demand, operations, and macroeconomic and geopolitical conditions. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements are subject to risks, uncertainties, and assumptions and are based on management's current expectations and views as of today, August 2, 2023. Procore undertakes no obligation to update any forward-looking statements to reflect new information or unanticipated events except as required by law. And if this call is replayed or viewed after today, the information presented during the call may not contain current or accurate information. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We'll also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. And with that, here's Dewey.

Thanks, Matt. And thank you, everyone, for joining us today. I am proud of the results that we delivered this quarter, despite the challenges we continue to see in the demand environment. Let me start by sharing a few highlights from the quarter. In Q2, we grew revenue 33% year over year and added over 600 net new customers, reaching a total of over 15,700 customers by the end of the quarter. We continue to make progress on our journey of efficient growth by improving operating leverage in the business while sustaining revenue growth. And Procore was once again ranked number one across 11 construction categories in G2's 2023 summer report. I've had the opportunity to spend a lot of time on the road this past quarter, and I want to share something that is top of mind from my travels. At Procore, we have a vision to improve the lives of everyone in construction. The only way to further this vision is to protect the industry's most precious asset, its people. Over the last century, we have made tremendous progress to improve the physical health and safety of workers in construction. But what's becoming increasingly clear is that we must prioritize mental health alongside physical health. You know, in the US, the rate of suicide for men in construction is about four times higher than the general population. That's why this quarter we came together with the B1M, a leading construction video channel, to officially launch Get Construction Talking, a global initiative to improve mental health in construction. By combining the B1M's reach of over 2.9 million YouTube subscribers with Procore's network of over 2 million users across more than 150 countries, we can bring awareness to mental health in construction and raise money to amplify the efforts of charities working in the space. I am honored to work alongside construction industry leaders to destigmatize mental health in the industry and provide resources to workers and organizations in need. During my travels, I had an amazing opportunity to tour the International Thermonuclear Experimental Reactor, also known as ETER. As an alternative energy and construction enthusiast, this was a real career highlight for me. The complexities and the scale of this project cannot be overstated. It's one of the largest construction projects on the planet, and it's a collaborative effort between 35 countries and over 700 contractors. I'm incredibly proud that Procore's customer, Ferrovial, is one of the prime contractors on this project and is contributing to building this game-changing technology. Examples like ITER that illustrate the sheer complexity of construction are an important reminder of why the industry continues to seek ways to optimize their efficiency and position themselves for continued growth. And this is only becoming more important given the current demand environment. In the past, we've talked about the many puts and takes in construction and how the aggregate construction volume and overall demand is what really matters most. As the demand environment continues to evolve, a tale of two stories has emerged. While some sectors in construction remain muted, other subsectors are experiencing unprecedented growth. The dichotomy we're seeing in the broader industry is not unlike the behavior we're seeing within our customer base. On our last earnings call, we shared a new dynamic that has surfaced in Q1, in which a portion of customers began demonstrating cautiousness and construction volume commitments, while at the very same time, a greater portion expanded their volumes. In Q2, this dynamic became more pronounced. Relative to Q1, a greater portion of the industry showed incremental conservatism, while at the same time, a greater portion grew their construction volumes with Procore. Similar to last quarter, both the incremental cautiousness and expansion activity was not concentrated in any particular facet of the business, but rather spanned multiple stakeholders, customer sizes, and geographies. And given this is the second quarter of seeing this dynamic, it's no longer just a data point, but it's becoming a trend that we're paying close attention to, and Howard's going to elaborate on this further. Speaking of strong expansion momentum, we continue to build upon our partnership with the industry with a number of notable customer wins in the quarter. I'd like to share a few examples, starting with PJ Hagerty & Sons, a leading general contractor with over 95 years' experience undertaking projects across the UK and Ireland. They manage a diverse portfolio across commercial, office, healthcare, education, industrial, and civil, with a particular focus on large-scale, complex projects. PJ Hegarty initially bought Procore displacing competitive solutions in order to consolidate their field and desktop solutions onto one connected platform and enable easier adoption for their project teams. They particularly valued our mobile accessibility, which allowed them to have better visibility into what was happening on site. They had previously been using Procore for their data center projects, but expanded this quarter and now will be using our platform across all of their projects. As part of this expansion, they're adding Procore BIM and analytics to their product suite to enable collaboration on BIM models and enhance their analytical capabilities. During my travels, I had the pleasure of meeting the PGA Hagerty team in person in their offices in Dublin. This is a great example of the relationships we continue to foster with our customers around the world. I'd like to share another example. Guilford County School District is the third largest school district in North Carolina, serving nearly 70,000 students across 126 schools. They originally purchased Procore for our intuitive collaborative platform particularly the real-time insights, analytics, and data ownership we provide. Guilford County recently passed two major public bonds totaling approximately $2 billion to support much-needed construction, expansion, and improvements across 12.5 million square feet of school facilities. As a result of these bonds, Guilford County is partnering with Procore to build several new schools, ultimately expanding their commitment with Procore by 4X. Our expanded partnership will benefit students, teachers, the surrounding community, and the long-term educational goals for all of Greensboro, North Carolina. Procore is contributing to build the schools, hospitals, and homes that we desperately need, and the infrastructure that powers them and brings them to life. This is just one great example of why I am proud to support the industry that builds the world around us. Another great example is Palmerlo, one of Canada's leading construction companies with nearly 200 active project sites. They've been involved in building incredible projects across Canada, including the Grand Theatre de Quebec, the University of Toronto student residences, and the Burgoyne Bridge. Since becoming a Procore customer in 2019, Palmerlo has focused on standardizing on the Procore platform, reducing the need for multiple other software solutions. This quarter, Pomerleau increased their investment with Procore, expanding construction volume on the platform. As part of this expansion, Pomerleau has started its journey bringing BIM models onto Procore for easier viewing and collaboration. Pomerleau will also be leveraging the Procore Extracts application as part of their data strategy to more easily digest data and enable flexible reporting. You know, it's been fascinating to see how quickly our customers have evolved from talking about data to talking about how they can leverage AI to get as much value out of that data as possible. In fact, AI now comes up in most of my customer conversations. We're going to share more in our perspective on this at our upcoming Groundbreak conference, but I wanted to take a moment to share how I'm thinking about the AI opportunity for Procore. You know, it's becoming abundantly clear that we are on the cusp of a transformational shift in generative AI. This powerful technology has the potential to transform how we work, how we think, how we operate as a business, and how we serve our customers. We have been expanding our AI and machine learning capabilities for years, from our acquisitions of Avada Intelligence and Indus.ai, to reporting enhancements in Procore Analytics, to new product features, like search functionality, submittals, automated area takeoffs, and voice-enabled capture. Now with the advent of large language models, we have yet another tool in our toolbox to unlock the value of the project data and drive greater efficiencies for our customers. By nature of being built on a single platform generating a massive amount of data, Procore is well positioned to leverage this technology to deliver even greater value to our customers and further our vision of improving the lives of everyone in construction. To achieve this vision, we must begin thinking of ourselves not just as tech providers or partners, but as trusted co-pilots for all of our users. The future of our business is to be there for them, to guide them, to assist them, and help them increase their productivity. You know, I've heard this referred to as customer intimacy, which makes sense. when you think about what conversational AI will mean for our end users. Connecting users across workflows on our platform has been the key to our success. We're evolving to provide intelligence to all of the work that is done in Procore every single day. We ultimately want our users to instinctively turn to Procore to help them do their jobs. Generative AI is one of the tools that will enable us to do this, allowing us to create solutions that are not just reactive, but proactive. Solutions that understand our users' needs even before they do. Solutions that can adapt, learn, and improve over time. We're not just building products. We are building partnerships. We're not just solving problems. We're anticipating them. And we're not just reacting to the industry. We are shaping it. So to wrap up, I want to invite all of you to our 2023 Investor Day, which will be held alongside our annual user conference, Groundbreak, on September 19th and 20th in Chicago. This is shaping up to be our largest Groundbreak ever, with thousands of construction leaders from dozens of countries expected to join us. We planned a jam-packed couple of days, including over 80 breakout sessions, an expo hall showcasing the latest advancements in construction technology, and an exciting lineup of keynote speakers, including renowned athletes like Michael Phelps and Laila Ali, and the founder and former executive director of Stanford's disruptive technology program, Michael Steepe. I couldn't be more thrilled to get together with our customers, our partners, and our shareholders, and I hope to see you all there. With that, let me hand it over to Howard.